Shop Local and Multiply: The Local Multiplier Effect
How Shopping Local Can Multiply In Your Area Economy
Shopping small, locally owned businesses like Snowville Creamery has a lot of benefits, from familiar faces to being more environmentally friendly. But did you know that for every $100 spent at a small business, about $53 recirculates in your community? Compare this to only $13.60 with chain businesses. This is thanks to what's called the Local Multiplier Effect.
Let's dive into what it is and what influences it, or if you'd like to skip ahead, click a link below.
What is the Local Multiplier Effect?
The Local Multiplier Effect, sometimes called the Local Premium, looks at how much money circulates in a local economy before it leaks out of the area. Businesses break down what they earn into their expenses. If those costs are local as well, the cycle goes on and boosts wealth, income, and jobs.
For example, you might buy from a local, small business. That company then uses the money to cover expenses such as wages, supplies, and may even contribute it to community charities. They may buy inventory locally, pay nearby service providers, and the employees themselves could spend their pay at other shops in your hometown
With a big chain company, a good chunk of that wealth ships out of the area economy to corporate offices far away. They're also prone to source supplies and inventory outside your community. Chains can add to your area's economy, but their effect doesn't multiply as much.
The Three Types of Impacts
Civic Economics and the Institute for Local Self-Reliance have studied the Local Multiplier. When they did their studies, there were three kinds of impacts considered.
This is the business' actual spending. It includes inventory, utilities, and wages. These are the working expenses. There's a good chance a local business will get their inventory or produce it closer to home and hire people in their community.
The indirect impact of a business looks at how much they spend at other nearby businesses. Smaller businesses are more likely to buy supplies and goods in their area instead of big companies that may not even be in the same country.
This is the money that is earned by people thanks to the business. When business owners, employees, and other community members that the company paid spend their income in the local economy. For big chains, part of the wages goes to employees far away, so their induced impact will be much less.
Putting it Together
Your dollar goes further by staying closer to home with small businesses. When you buy products from small companies like Snowville Creamery, it's reinvested into great-paying area jobs, local partnerships, and even community actions such as our donations to food pantries. It recirculates as employees work and play locally. And the more each of us keeps it in small business hands, the more growth it will bring for everyone.
Where are your favorite places to shop? Is it somewhere you think Snowville would be a great fit? Contact us and let us know!
Want some great ideas? Follow Snowville Creamery on Facebook for our weekly local shout-outs or subscribe to our newsletter to see spotlights on new locations carrying or serving Snowville Creamery products. You can also search our Find a Retailer tool to browse the stores near you that serve or sell Snowville Creamery.